One thing to keep in mind is lenders do not want to deal with a foreclosure.  There are already too many foreclosed properties which mean no profits are coming in and they are left to sell off property at a discounted price. So if you cannot qualify for a loan modification you can still try negotiating with your lender to work out a payment plan.

First, can you qualify for a loan modification?  You must make the first step and notify your lender of your hardships and sit down to see if you qualify. The lender probably knows you’re having difficulties paying if you’ve already missed a few payments but you need to show a commitment to saving your home and make the call.

The lender will require a financial history from you that details your income, assets and expenses.  Lay everything on the table and show where your money is going.  If you’ve been laid off from work explain that you’re committed to saving your home just experiencing a rough patch right now. 

If the lender is difficult to dealing with you get some help from a real estate agent to document neighborhood demographics.  Show the lender what they have at stake and how your repayment plan makes more sense than them foreclosing.  Now you’re going to have to do your part and put some thought and research into this, especially when the lender doesn’t want to develop a repayment plan. 

Keep in mind, the new Obama Housing Plan isn’t mandatory for banks to put into practice. The government does offer incentives and it makes sense for any lender to take part in loan modifications however they do not have to implement this plan.

You must do you part to save your home and develop a concise plan that shows you need the help and you’re willing to work at repayment.

After all, it simply does not make financial sense to take out an unnecessarily high interest rate mortgage. This will simply yield paying money out in interest that could be used for increasing the equity of the home and other sensible pursuits. So, seek the best mortgage that you can find or if you already have a mortgage look to refinance for better terms and rates. It is as simple as that.

A fixed interest rate is one that stays static through the duration of the mortgage. In other words, if the interest rate is 7% at the onset of the loan it will stay 7% at the end of the loan. A variable interest rate will vary depending upon market conditions. As such, this is a gamble that is designed to “beat the bank”. In other words, you may be able to get the interest rate at 5% as opposed to the fixed rate of 7%. However, there is also the risk of the interest rate hitting 12% and turning into a disastrous gamble. Then again, if the variable rate spirals out of control you may have the option of refinancing; but this will be dependent upon your personal situation.

Ultimately, the type of interest rate that you select will be based upon your own personal willingness towards risk. For some, a low risk conservative approach is preferred. For others, a more volatile approach may have appeal. Again, the proper option rests ultimately with personal goals and comfort levels.

If there ever was a sage piece of advice that could be given in regards to this particular business venture it would be that once the balances of the credit cards are at zero then the cards should never be touched again. Once the home equity loan option has been utilized the need for immediate financial responsibility should be enacted or else the results could be cataclysmic. Keep in mind if debt skyrockets out of control once again and the inability to pay becomes a reality then the home may very well be foreclosed upon. Needless to say, this would be a disastrous situation so the use of a home equity loan should be done to facilitate a new leaf as opposed to the furtherance of bad habits.

In short, there was a five year period that ran from 2000 – 2005 where mortgages were made available to borrowers who were having a difficult time being approved for loans by “mainstream” lending institutions. So, these borrowers sought alternate means of acquiring a mortgage and found their “supplier” in the form of subprime lending institutions. Essentially, the terms and conditions offered by a subprime lender were stricter than a standard bank and, additionally, the interest rates were much higher. This was not done in order to be predatory; it was done because the borrower was essentially a high risk candidate.

Unfortunately, as many of the traditional lending institutions predicted, these high risk borrowers ended up in default of their loans. This has led to foreclosures and in an attempt to avoid foreclosure many of the borrowers opted to dump their property and recoup their losses. With so many houses put up for sale market values plummeted and, as a result, the subprime mortgage crisis of massive foreclosures and devalued real estate has occurred. This has created a crisis and it will be quite a while before this massive real estate crisis eventually stabilizes.